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J.P. Morgan: Apple, Qualcomm No Longer Among Most-Preferred Stocks

Apple and chipmaker Qualcomm have been bumped from J.P. Morgan’s list of most-preferred stocks, analysts said Friday (April 1), as demand continues to slow for smartphones, according to a Reuters report.

Analysts cited new lockdowns in China related to the COVID-19 pandemic and the rising cost of goods because of the ongoing Russia attacks on Ukraine as among the reasons smartphone demand will continue to sag this year and Apple and Qualcomm were dumped from the Analyst Focus List.

Apple announced earlier this week that it’s slashing iPhone and AirPods production due to the likely lower demand. Qualcomm supplies chips for low- and mid-end Android handsets.

“There has been understandably a lot of noise around demand weakness across global tech, but we believe the macro weakness seeping through the sector will impact the consumer end-markets more materially,” said analyst Samik Chatterjee in the report.

J.P. Morgan still considers Apple and Qualcomm “overweight,” which is the equivalent of a “buy” rating, based on long-term potential. The “environment of slowing consumer demand” means network equipment companies Arista Networks and Ciena will take Apple and Qualcomm’s place on the list, with hopes of consistent demand for telecommunications and cloud-related spending, the report said.

Related: Apple Slashing iPhone SE, AirPods, iPhone 13 Production

Nikkei Asia announced Monday (March 28) that Apple will make about 20% fewer iPhone SEs next quarter than the tech giant had originally planned, a sign that consumer electronics demand has been lowered as the Russian attacks on Ukraine continue and escalating fears about global wars persist.

Apple launched the 2022 edition of the iPhone SE, a more affordable 5G-capable phone, less than three weeks ago, but is scaling back production by 2 to 3 million this quarter, four people told Nikkei Asia for its report. The company will also cut back on AirPods earphones production by 10 million units for 2022.

The tech giant shipped about 76.8 million AirPods last year. That number is likely to drop in 2022.

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